Deprived of prior-day futures support and still unable to find much in the way of either cooling or heating load, the cash market dropped at all points Friday. The usual weekend decline of industrial demand added a bit of extra price bearishness.
All but one of the losses were in double digits ranging from a little less than a dime to about 45 cents. For the most part softness was pretty evenly spread out geographically, but the Rockies tended to see most of the dips exceeding 30 cents.
After getting a big negative jolt from futures on Thursday, the cash market will have major screen support again Monday after the October natural gas contract rebounded by 32 cents Friday despite weakness among Nymex’s petroleum-related offerings (see related story).
Malin and the PG&E citygate fell about 30 cents as the giant dual utility issued a systemwide high-inventory OFO (see Transportation Notes). Westcoast was the only other western pipeline noting a problem with excess linepack, though.
Although it was unable to detect any Atlantic tropical activity Thursday, the National Hurricane Center (NHC) said Friday there was a low chance of development for a small low-pressure area “associated” with the remnants of Hurricane Fred that was centered about 460 miles south of Bermuda. NHC gave slightly better development odds (30-50%) to a broad area of low pressure centered about midway between Africa and the Lesser Antilles island chain.
Temperatures were due to stay seasonally mild in the South at least through the weekend as a wide-ranging series of showers and thunderstorms was predicted to both keep the region cool and create more flooding problems. Moderating weather allowed Florida Gas Transmission to end an Overage Alert Day that had been in effect for only Friday.
Conditions would be mostly on the dry side but cool during the weekend for the Northeast and Midwest. But what The Weather Channel called “a strong cold front advancing into the middle of the country” will trigger showers and scattered thunderstorms across the Plains Monday, further cooling that region to highs up to 15 degrees below average.
There was essentially nothing new in the western forecast: a steady diet of highs in the 100 area for such desert Southwest locations as Phoenix, moderately warm in the Rockies and interior California, and mild to cool everywhere else.
It was a fairly quiet market Friday as the general lack of weather-based demand finally caught up with cash prices that had primarily depended on futures support for three previous days of increases, said a Northeast marketer. He thinks the screen role will come back into play again after Friday’s spike, predicting that most cash quotes will be up 15 cents or so Monday.
Echoing the subject of an NGI article earlier in the week (see Daily GPI, Sept. 17), a Midcontinent producer lamented that it’s gotten very difficult to make any profit transporting gas because basis differentials have narrowed so much across the North American grid this year. He noted that the cash market was “kind of crazy” in recording increases Tuesday through Thursday in spite of weak weather fundamentals but seemed to have finally come to its senses somewhat Friday. However, he said, it’s hard to trade rationally when the market doesn’t seem to follow any rationale in going up or down one day and then reversing for no apparent reason the next day.
A Midwest market said it wasn’t surprising that futures had tanked Thursday despite a subpar storage injection report; what puzzled her was why the screen had been rising earlier and again Friday. Her company is buying daily gas for only one customer these days, and it may be on the verge of switching to coal for its generation needs, she said. It’s pretty cool in the Midwest currently, she added, but not cold enough to create much heating load yet.
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